LAES Keynoter Sondheim: Indies Must Maintain Legacy Disc Business While Embracing Digital Futures

Independent suppliers need to maximize existing businesses while embracing the new digital marketplace, said keynote speaker Bill Sondheim, president of the Cinedigm Entertainment Group, during his “State of the Industry” keynote presentation at the Los Angeles Entertainment Summit July 17.

The LAES event, held at the Loews Hollywood July 17-18, is presented by the Entertainment Merchants Association.

While “DVD and the physical formats in general will not be the longtime revenue drivers we’ve all enjoyed over the last 25 years,” he noted that there are “large demographics” that still like the medium because it is familiar, easy to use and affordable.

Therefore, he said, “I think it would be foolish” to abandon the segment prematurely,” he cautioned. In fact, Cinedigm’s disc business, which had experienced declines, flattened in 2017 and is now growing in 2018, in part due to smarter retail placement, interest in 4K Ultra HD, mult-pack sets and specially packaged products, he said.

Still, digital distribution is the “revenue engine” going forward, “and unlike its physical predecessor it’s taking many shapes and sizes, due in part to its more consumer-responsive nature.”

“I often say digital is the democratization of entertainment consumption,” he said. “Content distributors, retail shelves, they no longer decide what wins. The omnipresent availability of digital content anywhere and everywhere allows the consumer to be in charge.”

With digital content available through EST, transactional VOD and subscription streaming, he said,  content owners need to find consumers on the platforms and services they like. That’s why Cinedigm was early in embracing the OTT market and created three OTT channels.

“You need to be platform agnostic,” he said. “Confidently follow the money regardless of the platform.”

He added, “Tech is playing an increasingly role in content distribution. It’s no longer entirely accurate to say content is king.”

In that same vein, data is key.

“We put a great deal of focus and investment in securing extensive and detailed data,” he said. “And we have a strong culture of  analytics and self-reflection. Cinedigm looks at each piece of content to determine the right demographics. It starts and ends with the consumer.

“And once we’ve determined who will want a particular piece of content, then we determine where that consumer shops. That could mean Walmart or Best Buy, but it can also mean Netflix or Amazon or iTunes or even something more unique, like Crunchyroll.”

Noting that there were “no major studios or retailers” in the audience, Sondheim pointed out that indies are critical innovators. They “take chances on innovative content,” he said.

 

Seventh Annual Los Angeles Entertainment Summit Opens Tomorrow

The seventh annual Los Angeles Entertainment Summit opens tomorrow (Tuesday, July 16) with a focus on independent product, both physical and digital, as well as the booming OTT marketplace.

The trade show, produced by the Entertainment Merchants Association (EMA), runs for two days at the Loews Hollywood Hotel in Hollywood, Calif.

The 2018 Los Angeles Entertainment Summit is centered on one-on-one business meetings between independent content providers and retailers and streaming services, the EMA said back in May, when the event’s dates were announced.

The summit also features the  first-ever OTT Channels conference – a day of research presentations, sessions with industry thought leaders, and an exploration of opportunities in subscription video on demand and ad-supported video on demand.

LAES continues to provide an opportunity for the Cystic Fibrosis Foundation (CFF) to raise funds.

The event opens July 17 with a morning welcome session, featuring a CFF update from LAES co-chair Mark Horak and an EMA update from Mark Fisher, the association’s president and CEO.

Then comes a research super-session moderated by Media Play News publisher Thomas K. Arnold, featuring research presentations by GfK Entertainment, IHS Markit, Nielsen and the NPD Group.

Next is a spotlight presentation from Tobias Queesser, cofounder of Cinelytic.

Bill Sondheim, president of the Cinedigm Entertainment Group, will deliver the keynote address at 9:30 a.m., followed by the Independent Studio Home Entertainment Awards.

The OTT Channels conference will be held from 10:30 a.m. to 3:30 p.m., with a lineup of speakers and panelists assembled by conference chair Erick Opeka, EVP of digital networks at Cinedigm Corp.

And from 4 to 6 p.m., the Digital EMA Forum will bring together digital retailers, studios, independent content providers, and service providers to hear the latest research on digital home entertainment and discover how retailers and content providers are streamlining the digital supply chain through common practices.

The day ends with a cocktail party sponsored by FandangoNOW.

Day two of LAES, Wednesday, July 18, is devoted to business meetings and a networking lunch.

Cinedigm Inches Toward First Quarterly Profit

After myriad quarters of fiscal losses, home entertainment distributor and over-the-top video operator Cinedigm reported its first quarterly profit.

The distributor generated first-quarter (ended March 31) income of $46,000 on revenue of $17.6 million. That compared to a loss of $9.6 million and revenue of $19.5 million during the previous-year period.

Cinedigm said its content and entertainment business unit – which includes packaged media – decreased revenue 12% to $31.1 million from $34.2 million in fiscal 2018 during the previous-year period.

The company said the revenue decline was due to lower overall sales volumes for physical product and a change in the mix of content sold.

“Our traditional DVD and Blu-ray Disc business continues to be negatively impacted by changing consumer behaviors and digital market shift to more original productions has lowered demand for third party content,” Cinedigm said in a regulatory filing. “Our product mix has also shifted significantly toward licensed content in the current year.”

The decline in physical product sales was partially offset by a $700,000 increase in sales related to OTT channels (Dove Channel, Docurama and CONtv) and a slight increase in distribution related revenue.

“We plan on [OTT] becoming the biggest revenue contributor for the company, and [it] increased last year by 23% in aggregate, led by a 36% increase in OTT channel,” CFO Jeffrey Edell said on the fiscal call.

Meanwhile, net loss for the fiscal year increased 21.7% to $18.5 million from $15.5 million during the previous-year period. Revenue dropped 25% to $67.6 million from $90.3 million.

 

Docurama Adds Cargo Film & Releasing Content, Support and a Subscription Fee

Cinedigm’s ad-supported Docurama over-the-top video service June 14 announced a programming and marketing partnership with Cargo Film & Releasing.

The company signed a pact with David Piperni, founder of New York-based Cargo, which specializes in acquiring non-fiction features. Under the agreement, Piperni will be responsible for acquiring programming for Docurama, and curating the channel’s content library.

Piperni and his staff will handle many aspects of marketing for the channel, from day-to-day social media engagement and direct-to-consumer campaigns, to building strategies to capitalize on audience trends.

Cargo will also identify projects, producers, and talent who fit the brand of the channel, creating opportunities for producing original content such as behind-the-scenes exclusives and first-hand interviews associated with respective documentaries.

“This is [Cargo’s] specialty — they know what works,” Bill Sondheim, president of Cinedigm Entertainment Group, said in a statement. “They have rich industry relationships with top producers and talent, and they understand what audiences are looking for. Their expertise and insight [are] truly an invaluable part of Docurama’s expansion.”

As a result, the four-year-old channel will now include premium programming for an undisclosed subscription fee by the end of the month.

Docurama’s library features hundreds of feature films, shorts, and series, as well as interviews and film festival coverage.

Programming includes Patti Smith memoir, “Patti Smith: Dream of Life”, eight-part presidential event, “JFK – A New World Order”;sports fan profile “Losing Lebron”; Orca adventure “The Whale”, narrated by Ryan Reynolds; hip hop culture documentary “Style Wars”, and exposé, “They Call It Myanmar: Lifting the Curtain.”

“Cargo is dedicated to discovering cutting-edge films from all over the world and this new partnership allows us to bring these offerings to a whole new audience,” said Piperni.

 

New Animated ‘Oz’ Coming to Disc June 5

Cinedigm will release the animated The Steam Engines of Oz as a Blu-ray/DVD combo pack and digitally June 5.

The film, based on the graphic novel of the same name, is a re-imagining of The Wizard of Oz with a steampunk twist.

Set a century after Dorothy’s visit, the film finds the Emerald City has become an industrialized wasteland ruled by a tyrannical Tin Man, and Oz’s only hope is a young engineer named Victoria Wright who assembles Scarecrow, the not-so-Cowardly Lion, and an assortment of Munchkins and flying monkeys to find Tin Man’s heart.

The voice cast includes William Shatner, Ron Perlman and Julianne Hough.

Indie Suppliers a ‘Blessing’

If you really want to get an idea of how fast the home entertainment industry is changing, talk to any of the independent suppliers who are still going at it, competing with the big studios and their theatrical blockbusters.

As Ringo Starr would say, it don’t come easy.

Studios generally release their films on all the major platforms: Blu-ray Disc, DVD, digital, on demand, and, increasingly, 4K Ultra HD Blu-ray.

Indies, however, typically have to pick and choose, because just as not all movies warrant a wide theatrical release, when it’s time for them to be sent home some platforms work better than others, depending on the film.

And yet despite the challenges and obstacles, our industry is still blessed with a handful of indie stalwarts, from Cinedigm and Magnolia to Random Media, a film company headed by Eric Doctorow, who from 1983 to 2003 was president of worldwide home entertainment for Paramount Pictures.

I say “blessed” because without indies, home entertainment would consist primarily of big-budget blockbusters already familiar to viewers from their successful theatrical runs.

Independent home entertainment suppliers add variety to the mix. They also give independent filmmakers a chance to find an audience and maybe even make some money so they can continue to produce quality films and documentaries that otherwise might never be made.

And we must never forget that the indies are the ones who built this business. The home entertainment industry might have been launched more than 40 years ago when Andre Blay licensed 50 movies from 20th Century Fox and released them on videocassette under the Magnetic Video banner.

But the industry didn’t begin to grow and prosper until mom-and-pop video rental stores began to spring up all over the country, their growth fueled through the against-the-grain concept of “consumer dissatisfaction.”

Not only were the big studios dead-set against retailers renting their movies to the public, but when the courts ultimately ruled in favor of the retailers Hollywood had a hard time keeping up with the demand. Retailers soon discovered that the public’s appetite for movies was so voracious that if the latest studio hit wasn’t available, they’d be perfectly content with picking up something else. Shrewd mom-and-pops invested heavily in a broad selection of product and purposely limited the copies of the hits they brought in — figuring, correctly, that if customers were immediately “satisfied” with the latest theatrical hit, they’d rent it and leave. But if customers didn’t find what they were looking for, they’d pick up one or two or even three other movies, based on box art, posters or personal recommendations from movie-savvy clerks.

This successful, albeit unconventional, business model collapsed after the big chains got involved. Blockbuster, in particular, figured it could put the little guys out of business by promising consumers guaranteed availability of the latest theatrical hits — failing to realize it was merely sealing its own doom. “Big Blue” ran expensive ad campaigns and built massive “new release” walls packed with the latest theatrical hits.

I am convinced this focus on the hits led to a decline in consumer rental spending and paved the way for DVD, with studios jumping at the chance to sell their movies to consumers instead of rental dealers. Indie product suffered even more: consumers who used to rent three or four movies a week for $10 from the local video rental store were now spending twice that amount to buy the latest theatrical hit at Walmart or Best Buy. Yes, they were digging deeper into their pocketbooks, which made Hollywood very happy. But they were watching fewer movies.

Ultimately, the DVD bubble burst — and we all know the rest.  So thank God for the persevering indies who are keeping the spirit of the business alive – and independent film makers in business.

Latest Volume of Animated Series “RWBY” Due June 5

Rooster Teeth and Cinedigm June 5 will release the latest edition from the animated series “RWBY” when RWBY: Volume 5 arrives on transactional digital platforms, including Steam, iTunes and Xbox, as well as DVD, Blu-ray Combo Pack (with DVD), and a Special Edition Blu-ray Combo Pack featuring a 32-page RWBY Official Manga Anthology sampler exclusive to FYE stores.

The RWBY Official Manga Anthology is from the upcoming Weiss book from VIZ Media.

“We love how passionate the fans of RWBY are,” said Gray G. Haddock, head of animation at Rooster Teeth, in a statement. “Volume 5 received such a great reaction and we’re really looking forward to be able to provide these episodes along with a behind-the-scenes look at the series through the bonus features.”

In RWBY: Volume 5, Ruby, Weiss, Blake and Yang are each entangled in journeys of their own, but they all share one destination: Haven Academy. Whether it’s the promise of ancient relics, mystical maidens, or simply more power, it’s clear that the stage for the next great battle for Remnant has been chosen.

Bonus features include “5 Years of RWBY,” a behind-the-scenes retrospective that explores how the production of “RWBY” has changed over the years, including never-before-seen interviews; Weiss, Blake and Yang character shorts; and “CRWBY: Behind the Episode.”

Cinedigm Bowing Female-Centric SVOD Service

Cinedigm is launching what it claims is the first-ever women’s lifestyle subscription video-on-demand service (SVOD). The platform is expected to launch in the fourth quarter with distribution plans for Web and mobile, including both iOS and Android platforms.

Cinedigm is partnering with Gatherer Entertainment, an entertainment hub dedicated to providing women in the 35-54 demo with curated content.

The channel will offer one-stop-shop of content touching all aspects of a woman’s life, with topics ranging from news, beauty and fashion, to midlife women’s health and wellness tips, food, wine and cooking profiles, financial insights and planning, crafty DIY, technology updates, travel expeditions, and everything in between.

Original scripted content will feature episodes with breaks perfectly suited to fit viewers’ fast-paced lifestyles, while unscripted series will present news and information uninterrupted in two-minute formats, hosted by reliable, experienced, relatable women.

Launched by CEO Jenna Segal in 2017, Gatherer Entertainment spent a year researching viewing patterns and listening to women discuss how, where and when they watch video content. With increasingly busy schedules, balancing lives both at home and in the workplace, women 35+ are leading the OTT charge, eschewing cable and satellite in favor of regularly streaming their favorite shows, according to Cinedigm.

Segal’s credits include producing Broadway show GIGI and off- Broadway production, What We’re Up Against, as well as Web series, “Black Dynamite,” and “Lady Parts.” Segal previously served as director of production management at Viacom, working with MTV, VH1, Nickelodeon and Nicktoons.

Gatherer’s management team also includes co-founder and CMO Heidi Packer Eskenazi, founder of boutique firm HAP Consulting; and head of strategy and operations, Eric Sherman.

“Jenna and Heidi are smart, passionate leaders with a fantastic vision for building a content-centric community, and we look forward to helping them bring it to fruition,” Erick Opeka, EVP of Cinedigm Networks, said in a statement.

This latest OTT venture marks Cinedigm’s ninth video channel. The home entertainment distributor currently operates martial arts platform Combat Go, Docurama, CONtv, eSports lifestyle network WHAM, Asian music and pop culture service, HallyPop, a Chinese entertainment channel, and family-focused Dove Channel and DoveKids.

 

Cinedigm Launches OTT Gaming Network

Cinedigm April 9 announced the over-the-top video launch of WHAM, an ad-supported digital gaming and e-sports platform. The service is available on XUMO, an Irvine, Calif.-based online TV service, Amazon-owned Twitch.tv and Web and mobile devices.

Cinedigm is partnering with WHAM founder Gary Kleinman on the 24-hour channel driven by increased consumer interest in online gaming and e-sports-driven programming. Original content includes, “UMG Gaming,” showcasing game tournaments and highlights; compilation series, “Clip Blip,” and “e-sports Central Live,” broadcasting e-sports news, industry developments, new releases, and tournament results.

“Gaming lifestyle and e-sports content will be a multi-billion- dollar industry within the next two years,” Erick Opeka, EVP of Cinedigm Networks, said in a statement.

WHAM also features “Retro Gaming From The Strong Museum,” showcasing classic video games, commercials, and gameplay; and “Game Bytes,” a look at the bar/restaurant gaming scene.

Cinedigm says the XUMO platform is accessible on more than 45% of the smart TVs in North America and will help WHAM content reach more than 20 million homes.

XUMO is available on iOS and Android mobile devices, as well as on LG, Vizio, Hisense and Sharp TVs in May.

“WHAM is a significant addition to the XUMO channel lineup as we continue to broaden and deepen our offering of gaming content,” said Stefan Van Engen, SVP of content programming and acquisitions at XUMO.

Cinedigm Eyes Super Bowl Discs, China, Hallmark to Help Turn Fiscal Corner

Cinedigm is banking on a pending Super Bowl DVD/Blu-ray Disc release, in addition to expanding streaming video distribution through its Chinese corporate owner, to help it turn the fiscal corner.

Speaking on the third-quarter (ended Dec. 31, 2017) fiscal call, CEO Chris McGurk said he expects the March 6 retail release, Philadelphia Eagles Super Bowl LII Champions, to generate 20% to 30% more than last year’s Super Bowl release.

“While we focus on growing our digital business, we also recognize that we can selectively and opportunistically generate increased profits as a last consolidator in the declining physical DVD and Blu-ray business,” McGurk said.

The executive said sales of Hallmark Christmas titles increased 43% in the quarter from the previous-year period due to online sales driven by Amazon.

Last December, Bison Capital infused a $10 million low-interest loan to Cinedigm as part of a $40 million investment, making the Chinese investment group majority owner.

“In connection with that closing, we retired the remaining approximately $50 million in convertible notes that we have been carrying on our balance sheet, completing the full elimination of the $64 million in notes issued in 2015,” McGurk said.

He said the company continues to streamline packaged media operating costs — $11 million slashed over the past two years, while focusing on select brands such as “Hitchcock,” “Gangster Land,” “Hallmark” and NFL.

McGurk said Bison’s capital infusion for content investment, underscored by a “much more open playing field competitively due to industry consolidation,” would help entertainment distribution going forward.

Specifically, Cinedigm plans to generate “significant distribution fees” by releasing select indie films theatrically and delivering home entertainment content to Chinese platforms, including mobile, TV and online.

“Our advantageous position in China and new joint venture with Starrise Media should help us bring in more premium high-return content, McGurk said.

The executive believes the Starrise agreement could generate upwards of $15 million in annual revenue.

Meanwhile, Cinedigm reported a fiscal loss of $5.9 million on revenue of $18.5 million, compared to a loss of $481,000 and revenue of $24.4 million during the previous-year period.

Through the nine fiscal months, net losses increased to $18.7 million from $5.7 million last year. Revenue fell to $50 million from $70.8 million.